Key Takeaways
- The Ethereum Dencun Upgrade introduced proto-danksharding, enhancing scalability and reducing gas fees, especially for Layer 2 solutions.
- Scalability and data storage saw significant upgrades with Dencun, optimizing how Layer 2 rollups transmit data and managing blob data off-chain.
- EIP-6780 reduced security vulnerabilities in smart contracts, while EIP-4788 enhanced communication between Ethereum’s main chain and Layer 2 solutions.
- Dencun reduced gas fees, making transactions affordable and the Ethereum network more accessible.
Ethereum has revolutionized the cryptocurrency ecosystem since its inception in 2015. The introduction of smart contracts and ERC token standards has enabled a whole new realm of possibilities. These include decentralized finance, NFTs, DAOs, and more.
As a result, Ethereum has become the foundation of Web3, facilitating over 1 million daily transactions and securing tens of billions of dollars in total value locked (TVL) on its platform.
Despite Ethereum’s immense success, lack of scalability has limited the network’s potential and caused a bottleneck for transactions. Ethereum’s developers have been working on a series of upgrades aimed at overcoming network congestion and high gas fees. One of the most important milestones in this ongoing process is the Dencun Upgrade.
In this article, we’ll break down the Ethereum Dencun upgrade and explain what it means for the Ethereum network, its scalability, and its future.
What Is the Dencun Upgrade?
The Ethereum Dencun Upgrade, often referred to as simply “Dencun,” was deployed in March 2024. It was part of Ethereum’s broader roadmap to scale and improve the network. Dencun follows in the footsteps of Ethereum’s previous major upgrade “The Merge”.
The latter shifted Ethereum’s consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS). It sought to address scalability, gas fees, and storage concerns.
The Dencun upgrade is a combination of two Ethereum hard forks:
- Deneb (an execution layer upgrade)
- Cancun (a consensus layer upgrade)
This two-part approach built on previous upgrades and introduced new elements like proto-danksharding (we’ll come back to that) and other key Ethereum Improvement Proposals (EIPs). These elements were aimed at making the network faster, more secure, and more cost-effective.
The primary goal of the Dencun Upgrade was to optimize how Ethereum handles data, particularly in the context of Layer 2 solutions. L2’s have emerged as vital to Ethereum’s scaling strategy and Dencun made Ethereum’s blockchain more efficient, paving the way for broader adoption.
Understanding Ethereum Dencun Upgrade – a Deep Dive
While the Ethereum Dencun Upgrade is multifaceted, the most significant component is EIP-4844. This improvement proposal introduces something called proto-danksharding, an early step toward full danksharding implementation.
Proto-danksharding is a way for Layer 2 solutions, such as Optimistic Rollups and zk-Rollups to transmit transaction data to the main network more cheaply and efficiently. Instead of storing transaction data (blobs) permanently on-chain, it moves this data off-chain once it’s been verified. This alleviates the main network, decreasing the data burden for validators and helping Ethereum scale more effectively.
Let’s have a look at some of the specific improvements introduced by the Dencun upgrade.
Scalability
By incorporating proto-danksharding, Ethereum is preparing for a more scalable future. Dencun optimized how Layer 2 rollups send data to Ethereum’s main network and drastically reduced the amount of data that needs to be stored on-chain.
As a result, the Dencun upgrade is laying the foundation for a massive upgrade in throughput in the future. While there is no notable increase in transactions per second after the upgrade, Dencun is another step toward sharding. This long-term solution will split the network into “shards” that process transactions in parallel, unlocking potential speeds of up to 100,000 transactions per second and beyond. [I REPHRASED THIS PARAGRAPH]
With full sharding, developers expect the network to handle hundreds of thousands of transactions per second. That will be a significant improvement over the current 30 TPS of Ethereum’s mainnet.
Lower Gas Fees
One of the most anticipated improvements from the Dencun upgrade is the reduction in gas fees. For years, the fees on the Ethereum network have been plaguing users, often costing more than the value of the transaction itself.
With the implementation of proto-danksharding, the cost of transactions dropped significantly, especially for Layer 2 users. This reduction is particularly important in the DeFi, Web3 gaming, and NFT sectors where smaller transactions were often uneconomical. With lower fees, Ethereum becomes more accessible to users and developers.
Data Storage Upgrades
The Dencun upgrade also enhanced data storage on Ethereum with how blob data is handled. Blobs refer to chunks of data stored off-chain, which are essential for Layer 2 scaling solutions. By optimizing the storage and transmission of blobs, Ethereum can now handle larger volumes of data without overwhelming its validators.
This change allows Ethereum to process and store data more efficiently, helping to alleviate the blockchain’s current bloat and prepare it for further scaling. Better storage management means a more sustainable network in the long run. Once again, another essential element for all decentralized applications and services.
Increased Smart Contract Security
Another significant improvement introduced by Dencun is the improved security of smart contracts through EIP-6780. This Ethereum Improvement Proposal boosted the overall security of the network by making smart contracts less vulnerable to malicious actors.
EIP-6780 ensures that certain smart contract functions, particularly those related to self-destruction, are handled more securely. This reduces the chances of exploitations and increases Ethereum’s overall integrity, making it a safer environment.
Better Communication With Layer 2
As we’ve noted, Ethereum’s Layer 2 solutions have become integral to its scaling strategy. It was no surprise that the Dencun upgrade introduced improvements to the communication between Ethereum’s main chain and Layer 2 solutions. The upgrade allowed Layer 2 rollups to securely access data from the consensus layer, improving interoperability and reducing potential security risks.
EIP-4788 was an improvement, part of Dencun, that enhanced communication, making it more secure and robust. It improved how Layer 2 networks transmit data to Ethereum’s core network and reduced the likelihood of security vulnerabilities being exploited in either layer. This change strengthened the network’s overall security and efficiency.
Are Gas Fees Lower After the Dencun Upgrade?
Proto-danksharding, introduced in EIP-4844, significantly improved how rollups transmit data to the main Ethereum chain. In return, this improved gas fees on both the main network and the Layer 2 solutions.
Many of the popular L2s experienced a reduction of nearly ten times, some dropping the average gas fee from around $0.80 to mere cents. In the meantime, fees on the Ethereum mainnet dropped from an average of 90 Gwei in March to just 8 Gwei in June.
While the lower gas fees were certainly a welcome change, they had a certain downside. With less ETH burned in fees, Ethereum turned inflationary, raising some concerns about the long-term price of the native coin.
Closing Thoughts
The Ethereum Dencun Upgrade marks another important step in Ethereum’s journey toward scalability, security, and mass adoption. It’s the latest in a series of ongoing improvements, that prepare the network for the next phases of its roadmap.
With each upgrade, Ethereum inches closer to its ambitious goals laid out by Vitalik Buterin. After the Merge, Ethereum is looking forward to the Surge, Verge, Purge, and Splurge phases. These upgrades aim to solve Ethereum’s most pressing issues and make it the go-to blockchain for dApps and the wider Web3 ecosystem.
FAQs
What is proto-danksharding?
Proto-danksharding is an early implementation of the full danksharding mechanism that improves how Layer 2 rollups send transaction data to Ethereum’s main network. It reduces congestion and lowers gas fees.
What is the Ethereum Roadmap?
The Ethereum Roadmap refers to a series of planned upgrades aimed at improving the network’s scalability, security, and efficiency. Key phases include the Merge, Surge, Verge, Purge, and Splurge.
What is EIP-4844?
EIP-4844 is an Ethereum Improvement Proposal that introduced proto-danksharding, enabling more efficient data storage and transmission between Layer 2 solutions and Ethereum’s mainnet.
